Additional Allowances
19.A71. As seen earlier, a ‘principal business corporation’ may deduct the aggregate of its Canadian exploration and development expenses to the end of the taxable year to the extent that they have not been deducted previously.
19.A72. A taxpayer may deduct such expenses which have been incurred in connection with certain mines from the profits reasonably attributable to the operation in Canada of that mine. These include oil and gas wells and precious and base metal mines. The allowance in any year is limited to 25 per cent of the aggregate of all expenses reasonably attributable to the prospecting and exploration for and development of the mine prior to its coming into production in reasonable commercial quantities. This does not include:
- (a) exploration and development expenses which may be claimed under other provisions;
- (b) expenses deducted in computing the income of the taxpayer in the year they were incurred;
- (c) the cost of properties in respect of which capital cost allowance may be claimed; and
- (d) the cost of leasehold interests.
19.A73. After 1 January 1977 taxpayers deriving income from oil or gas mining operations may deduct all drilling and exploration expenses from current and earlier years to the extent not deducted previously.